"The government has to take into account several dimensions of issue before decision can be taken," Chidambaram said at a news conference.
"On one column (of a newspaper) you will say, deregulate diesel price and on another column you will say inflation (will rise). These are not unidimensional issues, you cannot approach a issue from one dimension," he added.
Based on the recommendations of the Kirit Parikh Committee, the government in 2010 had "in principle" decided to deregulate diesel prices. The decision, however, is yet to be implemented.
The price of diesel, which currently costs Rs.47.15 a litre in Delhi, was last revised on Sep 14, 2012, when it was hiked by a record Rs.5.63 per litre.
The government has promised cash support of Rs.30,000 crore to state-run oil marketing companies to cover a part of the Rs.85,586 crore revenue loss on fuel sales during the past six months of April-September period.